As the graph clearly shows and I stated in my previous response, the correcting occured in the early 80s, 1981 & 1982 to be exact. Last time I checked that was early 80s, not late-80s. By mid-82, the market was essentially flat and continued so until early to mid 86 (remember Expo?) when it started to pick up again. As I and others have stated (and most real estate experts), this correction in 81-82 was almost entirely due to extremely high interest rates. People were literally walking away from their properties.
There are people literally walking away from their properties in the USA too. Sure we supposedly don't have as many subprime mortgages and whatnots but according to the article from REMAX stating that at least 50% of DT condo buyers are speculators would suggest a good portion of those investors are not gonna want to put too much money down if their sole purpose is to flip presales.
True, but interets rates peaked over 20% prior to the correction so I stand on my previous statement.
It looks like interest rates peaked at 18.5 percent according to this graph. 14% low to 18.5% high, I'd hate to face either interest rate in todays standards but comparatively atleast in ratio wise, they aren't that huge of a difference.
http://www.mississauga4sale.com/rates.jpg
The next significant correction occured in 1990. Again, last time I checked, 1990 was not the late 80s. This correction was short lived and lasted less than 2 years before prices started to increase again. This short-term drop was primarily due to profit taking by investors and a temporary reduction in off-shore investment following the post-Expo boom.
From what it looks like on the graph is that in 1987 or so the market started picking up in the post expo boom. Reached a peak in early 1989 and fell till the mid 1990's. You can downplay this if you would like but from peak to trough was approximately a 20+% correction (300,000 peak, 230,000 bottom)and thats nothing to laugh at if you were a sucker that bought at the top and had to sit on it for almost 2 years not knowing when that property is going to go back up. Much of this market is psychologically driven and if you were a novice speculator that overstretched yourself thinking the market was going to keep going up, 2 years is a pretty longtime to wait. That is with hindsight too, imagine if you did not have this foreknowledge and have been waiting for a year already and all you see in the headlines is "real estate still falling" and your paying this vacuum mortgage sucking your finances dry, you'd probably want to cut your losses too.
The final significant correction on the graph you referenced started in 95 and lasted through 98. As I stated previously, this dip was entirely due to the "leaky condo crisis".
Some people say it was the leaky condo crisis, some people say it was the HK chinese leaving vancouver to immigrate back to HK after they found out the China takeover was safe for their finances. I'm sure real estate "experts" will think up a whole whack of reasons that may or may not make sense. Fact of the matter is, any expert that has a vested interest in pounding away at public psychology to get a market to rise and a vested interest to cover their asses after it falls is going to be biased. It still doesn't change the fact that we had a boom and a bust. So far, according to that graph we had 3 booms/busts (my definition being a quick rise in prices and a equally quick drop in prices that is 20% or greater from peak to trough).
I did. The 6.25% is the Business Prime Rate, also known as the Chartered Bank Prime Rate. If you check on the website of any of the major Canadian Chartered Banks (CIBC, BMO, RBC, etc.) you will find this to be their posted prime rate. The 7.39% is the average 5-year conventional mortgage rate posted by the Bank of Canada. Anyone who gets a mortgage at that rate is a fool. With a little bit of negotiation, anyone with decent credit can get a mortgage at ½% to 1% below the 6¼% Chartered Bank Prime. Once again, you may want to take the time to read and understand the information you are quoting before you spout off.
Any moron would know you can get a lower rate than the official rates at BoC, I was assuming that since you talked about the ultra high interest rates of the 80's in the context of the official rates, then you were also talking in the same context when you referred to todays rates. Either way, the US housing market fell when the Federal reserve offical rate was 6.5%, so considering that US citizens tend to have a higher income than us on average, it would be atleast somewhat safe to begin worrying that 6.25 is getting dangerous for Canadian debt load.
Which of course just further shows your ignorance. If you did a little bit of research before spouting off, you would see that the data given out by StatsCan for the 2006 census, shows that from 2001 to 2006 Metro Vancouver's population growth represented 63% of the total population growth in BC. So, sorry if my 50% number was a little low.
Fine, I stand corrected on this point, I still stand by the fact that 63% of 1.2% increase in population does not justify an almost 200% increase in housing prices.
The market may flatten or perhaps even drop by up to 5%, but in the long run it will go up again.
This we have yet to see. I would point out that Los Angeles, Boston, San Diego, San Francisco, Seattle, Miami, Washington, Las Vegas, Tampa, Phoenix, New York, Portland, Chicago, Minneapolis, Denver, Atlanta, Charlotte, Dallas, Cleveland, Detroit, CALGARY and many other cities have dropped beyond 5% in prices in a very short time. People can believe that Vancouver is different but history has a tendency of repeating itself and we have had our fair share of booms and busts in real estate. Since this is the biggest rise in housing prices in the history of North America, it would seem to be wishful thinking that somehow a big correction can hit so many cities but miss Vancouver.
http://bigpicture.typepad.com/comments/2007/10/a-tale-of-20-ci.html
